2011 (3) TMI 1512 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of relevant provisions of the Tamil Nadu Value Added Tax Act, 2006 regarding the liability to pay tax and compounding fee.
2. Allegation of arbitrary and illegal actions by the second respondent in intercepting goods being transported to Delhi.
3. Request for release of goods subject to adjudication proceedings and furnishing of a bank guarantee.

Analysis:

1. The main contention raised by the petitioner was that the goods imported from Hongkong and cleared by a clearing and forwarding agency were intercepted by the second respondent during transportation to Delhi. The impugned notice levied tax and a compounding fee under the Tamil Nadu Value Added Tax Act, 2006. The petitioner argued the notice was arbitrary and illegal, citing relevant case laws to support the claim.

2. The respondents contended that the petitioner, a dealer in Delhi, was liable to pay the tax and compounding fee as the goods were allegedly being off-loaded in a local godown for local sales, violating the Act. The petitioner's actions were deemed to be an offense under specific sections of the Act. The petitioner requested the release of goods pending adjudication proceedings, offering to provide a bank guarantee.

3. In response to the arguments, the court directed the second respondent to release the goods upon the petitioner furnishing a bank guarantee to the satisfaction of the respondent. The adjudication proceedings were to be conducted promptly, with the petitioner instructed to cooperate fully. The writ petition was granted in favor of the petitioner, with no costs awarded, and the connected miscellaneous petition was closed.